Edited by Ayala Malach-Pines and Mustafa F. Özbilgin
Chapter 4: Exploration and Exploitation in High-technology Start-ups: A Process Model for New Firm Development
4 Exploration and exploitation in hightechnology start-ups: a process model for new firm development Björn Klocke and Hans Georg Gemünden Introduction This chapter addresses exploration and exploitation activities in young technology-based start-ups. In such firms, the management of exploration and exploitation processes is critical for survival, and these processes have to be mastered within a relatively short period. Therefore, in their case one can observe exploration and exploitation processes and their impacts much better than in mature companies, which rely not only on newly created exploration and exploitation routines, but also on the knowledge and positional advantages that they have created over a long and complex history. Young high-tech start-ups face many challenges when they want to make a profit from their know-how. They need to find attractive markets and customers, to discover which need fulfillments would create the highest customer value, and to learn how to produce and deliver products that are able to do this at a reasonable price, as well as learn how to cope with many regulatory demands. In addition, they need to find investors that are willing to provide equity or loans in order to finance the required investments over a longer period of time. This is not easy, as young technology-based firms face high risks and need a considerable amount of money, particularly where they have high growth potential. Thus these firms need intensive exploration activities in order to define and implement their business model. However, such processes take time and cost...
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